Yum China to Acquire Pizza Hut Brand in Mainland China

By Bobby Samwell • Tuesday, June 16 10:55 • Permanent Link

Yum China Holdings said it will pay $1.2 billion in cash to acquire ownership of the Pizza Hut brand in mainland China from Yum! Brands, ending the license-fee arrangement that has been in place for the business.

Pizza Hut China generated $2.3 billion in segment revenue in 2025 and $183 million in segment operating profit. In the first quarter of 2026, the chain posted its 13th straight quarter of same-store transaction growth and its eighth consecutive quarter of restaurant margin and operating profit expansion.

The business currently operates 4,375 restaurants across more than 1,100 cities, and Yum China is targeting more than 6,000 Pizza Hut stores by 2028. The company also said it wants to double Pizza Hut’s operating profit by 2029 versus 2024.

Yum China said the removal of license fees paid to Yum! Brands should immediately lift Pizza Hut China’s restaurant margins and operating profit margins. It also said the deal should be accretive to diluted earnings per share starting in 2026 after closing, and mid-single-digit accretive in 2027 and 2028.

The transaction is expected to close in the third quarter of 2026. Yum China said its 2026 full-year financial guidance remains unchanged.

The company said it will fund the purchase with a mix of cash and debt financing. It also reaffirmed capital return plans of $1.5 billion in 2026, then roughly 100% of annual free cash flow after subsidiary dividend payments to non-controlling interests beginning in 2027. Yum China said that should translate into average annual returns of about $900 million to more than $1 billion in 2027 and 2028, rising to more than $1 billion in 2028.

At the same time, Yum China said KFC China will remain its main growth engine. KFC China has 13,454 stores and is targeting more than 17,000 by 2028. The company said KFC China will also become eligible for a decade-long financial incentive from Yum! Brands if it meets certain system sales growth targets. The market has reacted to these announcements by moving the company's shares -0.77% to a price of $43.91. If you want to know more, read the company's complete 8-K report here.

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